ECB Rate Hikes Ineffective Against Supply-Shock Inflation (socialeurope.eu)

• Rate hikes in 2021-23 came too late to affect inflation trajectory.
• Fuel-price inflation led headline inflation by 6-18 months.
• Reserve remuneration transferred €332.64 billion to euro-area banks.
• New oil shock from Iran war prompts ineffective rate rise preparations.

"Analysis showing ECB and other central banks' rate hikes during 2021-23 had minimal impact. Transmission lags of 1.5-2 years and fuel-price inflation as main driver are cited. Remunerating reserves transferred €332.64 billion to euro-area banks, boosting lending and counteracting tightening. Facing a new oil shock from Iran war, central banks are preparing another round of hikes despite evidence of ineffectiveness."